Business & Investment

Brickability Group – Looking for an additional 15% price increase

The company is all about growth and its interim results by the end of September will be announced within the next three weeks.

2 weeks ago Brick Ability Group (LON: BRCK) We have informed shareholders that we plan to double the numbers in the first six months of the current trading year.

Value has doubled in the last two years

When listed on the AIM in late August 2019, it was valued at £ 149.8 million, with 87.3 million new shares issued at 65p each, bringing the company’s net value to £ 53.7m.

Today, the group has a market capitalization of £ 325m and is growing through organic and strategic acquisitions.

This is a classic example of a “buy to build” of a successful individual business, pooled in one cohesive structure aimed at maximizing both revenue and growth.

We have developed or acquired a business that has built a regional, regional, or national brand power while being part of a strong purchasing power business.

Group business

The Group’s businesses are concentrated in the three core product fields of bricks and building materials, with 15 businesses in 27 locations nationwide. Roofing products and services, 3 businesses from 2 sites. We also have heating, water supply and drainage sanitation equipment, and fittings, and we are developing 6 businesses from 6 sites.

Founded in 2017, the Bracknell-based group employs approximately 325 people.

The company faces bricks, blocks, ceramic pavement products, rainscreen cladding systems, building masonry, slate and concrete roof tiles, prefabricated flint blocks, loose wall stones, and joinery materials, radiators, A market-leading supplier of heated towel rails. , Floor heating system, and related parts and accessories.

We supply more than 300m of bricks annually.

Aiming to be a leading supplier, we serve the construction industry, including homebuilders, developers, contractors, general contractors and retailers.

Over the last 25 years, we have built excellent relationships with both our customers and our suppliers.

As it has grown, the Group has developed central agreements with larger customers offered by local businesses.

Our regional sales network provides nationwide coverage with expertise and technical expertise.

Its coverage and client reach provide scale and purchasing power to access high quality products and supplies both in the UK and abroad.

The group also provides construction-related services such as brick matching. Brick calculator. Accurately estimate the number of bricks or blocks needed for your project, thereby avoiding waste. The quantity takeoff service, which provides measurements and accurate estimates as part of the package, can also predict spending on specific projects and try to meet specific budget requirements.

Sales split by department

Group revenue for the year to the end of March 2021 was £ 181.1 million.

Looking at the division, bricks and building materials account for £ 144.21 million (79.6%) of sales. Heating, water supply and drainage sanitation and fittings accounted for £ 24.45m (13.5%) of the total. Meanwhile, the roofing service sold £ 12.43m (6.9%).

All sales were made in the UK and £ 960,000 was sold in Europe.

Equity shows strong management holdings

The number of issued shares is 298.53 million and the value of the group is £ 325 million at 109p.

The large list of holders includes Liontrust Investment Partners (9.96%), Promethean Investments (9.72%), Octopus Investments (7.17%), FIL Investment Advisors (5.38%), Amati Global Investors (4.24%) and Otus Capital. Includes Management (4.23%). ), And Ruffer LLP (3.18%).

Three directors own less than 25% of the shares. AlanSimpson (CEO) owns 11.2%. Paul Hamilton owns 10.3% and Arnold van Hught owns 3.35%.

Recent transaction updates

On Wednesday, October 13th, the group published an update covering that interim period.

The UK housing construction sector said it remained healthy after a strong post-pandemic recovery. It was driven by demographic changes, a significant stagnation in demand, and supported by government incentives.

The group initially considered it in a good position to benefit from these structural tailwinds and made it clear that it was in a position to continue to benefit from these general themes.

The company’s management has a very strong purchase order and “As one of the UK’s leading building material distributors, Brickability is well suited to supply UK homebuilderes as demand is expected to continue to grow.”

In addition, after the successful acquisition of £ 63m in Taylor Maxwell’s timber wholesale and commerce business in the summer, the group has grown significantly in its acquisition pipeline, which needs to be expanded while incorporating it into renewable energy products. increase.

According to the update, group revenue in the first half of 2021 was around £ 223m, an increase of about 200% compared to the first half of 2020, and EBITDA could be £ 17m compared to the previous £ 8m. there is.

Broker’s view

Kevin Cammack, an analyst at Cenkos Securities, a group broker, predicts that sales will more than double this year to £ 391.3m (£ 181.1m) by the end of March 2022. (£ 15m), 7.3p (5.6p) earnings, 2.1p (2p) dividend per share.

During 2023, he will generate £ 503.5m in sales and £ 34m in earnings, equivalent to a profit of 9.2p and easily cover a dividend of 2.3p per share.

Not surprisingly, Cenkos rates the Group’s stock as a “purchase.”

My view

This is really a growing group and its share deserves any portfolio.

Since profiling 18 months ago, he has increased by 280%, is a good performer, and has much more to do.

Perhaps the announcement of interim results in the coming weeks will provide additional impetus.

They recently peaked at 114p, more than doubling my price target.

It is currently sold at 109p, but in the short term you can see that it will easily rise to 125p without interruption and to 150p next year.

(Profile 16.04.20 @ 39p sets a target price of 55p *)


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Brickability Group – Looking for an additional 15% price increase

https://masterinvestor.co.uk/equities/brickability-group-looking-for-a-further-15-price-uplift/ Brickability Group – Looking for an additional 15% price increase

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